Government 'listening' on childcare

The Government is listening to concerns over plans to scrap tax relief on childcare vouchers and an announcement will be made next month, Children's Secretary Ed Balls said.

Mr Balls said it was "good for the Treasury to listen" and Chancellor Alistair Darling would announce his intention on the childcare tax break in the Pre-Budget Report on December 9.

More than 80,000 people have signed a petition on the Downing Street website calling on the Prime Minister to reverse the move.

And 88 MPs, 50 of whom are Labour, have backed a Commons motion warning it would worsen the gender pay gap, reduce opportunities and incentives for two parents to work, impair the quality and affordability of childcare, and remove a key source of income for nurseries and childminders.

At present, working parents can make significant savings on the cost of childcare by opting to receive £243 of their monthly pay in vouchers before income tax and National Insurance is deducted.

The tax break is equivalent to a 31% saving on the first £243 spent on childcare costs each month for basic rate taxpayers, or 51% for higher rate ones.

Gordon Brown announced in September that no new entrants would be accepted to the scheme after 2011, while the tax relief would end for all people still receiving the vouchers from 2015.